Bank mis-selling – change the law says watchdog

A UK banking watchdog has suggested the law should be changed to prevent future bank mis-selling.

The Financial Services Consumer Panel (FSCP) advises the Financial Conduct Authority (FCA) as ‘an independent voice for consumers of financial services’ and they want the duty of care from banks to their customers to be enshrined in law.

Legal duty

The panel believe that adding a legal duty of care would strengthen additional rules and points to the success of such a system in the Netherlands.

Panel chair Sue Lewis said: “We believe a change in the law is needed to speed up and embed cultural change.

Packaged bank account

“Under a legal duty of care, no bank would, for example, sell a packaged bank account without first checking with the customer understood and could benefit from all the elements of the account,” she added.

In its report the panel said customers thought banks were only interested in winning new business. Quoting the Dutch example, they said their banking system and seen an improvement in conduct and culture since it introduced a duty of care in 2008 and argued the same should happen in the UK.

PPI mis-selling

The FSCP claim that the legal duty would result in less need for intervention from regulators, prevent future mis-selling ‘such as the PPI mis-selling scandal’ and speed up the change of culture in the banks.

Ms Lewis said: “We believe the banks and the FCA should be measuring change as seen by the customer and that a loyal customer is not same as a well-served customer.

“If customers don’t notice a positive difference in the way the banks treat them then the banks, the Banking Standards Board and the FCA will have let customers down again.”

Committed

A spokesman for the British Bankers’ Association (BBA) said: “Banks are committed to treating their customers fairly and providing them with first class service. Major reforms designed to raise standards across the industry have been introduced in recent years.

“This includes a new individual accountability regime and significant changes in the way employees are paid. Frontline staff are now no longer given bonuses based on the amount they sell, but rather for delivering good customer outcomes.”